News

Loans curb at RBS

Royal Bank of Scotland, which is 70% owned by the taxpayer, is making it more difficult for first-time buyers to take out loans.

From Tuesday, the interest-only mortgages popular with new home-owners will be offered only to those with deposits of at least 25%. Buyers with smaller deposits will have to take repayment mortgages, where capital borrowed is repaid as well as the interest, adding hundreds of pounds to the monthly payments.

Previously, interest- only mortgages were available to buyers with only a 15% deposit. The change will also apply to NatWest and First Active, part of RBS Group.

Brokers said RBS mortgages would become "off-limits" for many first-time buyers who favour interest-only deals because they are more affordable initially.

On a £200,000 loan, monthly repayments with RBS's three-year fix at 4.39% would be £732 for an interest-only mortgage, compared with £1,099 for a repayment deal.